America's Fastest-Dying Towns

If you've ever flown into Chicago, you've seen Bensenville. A village to the south of O'Hare Airport, it was part of Chicago's post-World War II growth boom, providing a multitude of manufacturing and warehousing jobs to the country's first wave of suburbanites.

As late as 2000, times were pretty good. Poverty was a minuscule 6.5%, incomes were growing and folks were relocating to Bensenville from outside the state at a steady rate.

But Bensenville's fortunes have since changed. Incomes have dropped by 11.4% (without accounting for inflation), poverty has more than doubled and domestic in-migration has ground to a halt.

"Much of the low-level manufacturing work has gone overseas, or the jobs have shifted to the outer edges of the metro area," says Kenneth Johnson, a senior demographer at the Carsey Institute at the University of New Hampshire. "What's happening is, you have industrial jobs replaced by service jobs."

Bensenville leads our list of America's dying small towns. Other manufacturing hubs hit hard by declines in the auto industry appear on the list. They include places like Kokomo, Ind., Austintown, Ohio, and Middletown, Ohio.

"I'll slim it down to one word for you: cars," says Chris Cornell, an economist at Moody's Economy.com. "Kokomo was remarkably poorly positioned. Its two major employers were Chrysler and [auto parts maker] Delphi. Both have done poorly and had some pretty major layoffs."

Behind the Numbers

While major cities' tales of woe are well known, there are plenty of small towns across America where the economy has been in sharp decline since 2000. To find them, Forbes.com used data released Monday by the U.S. Census Bureau.

The data, part of the U.S. Census Bureau's three-year American Community Survey, which gathered findings between 2005 and 2007, rank cities, towns and Census-designated places (CDPs) with populations between 20,000 and 65,000. We tracked four metrics: income growth, the rate of domestic in-migration, the change in poverty and the percentage of the population with a bachelor's degree or higher.

Incomes have dropped in all the places on the list since 2000. Even before adjusting for inflation, workers in places like Asheboro, N.C., or Spanish Lake, Mo., saw median incomes decline over the last seven years. In the former, this is a result of job losses in the manufacturing and heavy industry sectors; in the latter, an inability to attract highly skilled workers has hampered annual salaries.

Median incomes can drop if young workers or immigrants are moving to an area and taking newly formed jobs at lower salaries, which isn't necessarily a sign that times are tough. However, if the number of folks under the poverty line surges while incomes drop, it's a sign of economic decline instead of transition. This is what's happening in places like Middletown, Ohio, which saw the seven-year poverty rate jump from 12% to 22%.

Further hampering economic growth: low in-migration. People vote with their feet, it's said, and there's no better endorsement of a city's future prospects than if citizens of other places are relocating to it en masse.

That's not the case in a place like Hamtramck, Mich. Only 0.7% of that city's population has moved there, from another state in the last year. In a growing area like Lawrenceville, Ga., where incomes have grown 8% since 2000, migration rates are much higher, with 5.1% of the population consisting of recent transplants.

Education levels also factor into an area's financial well-being. It serves as an indicator of a potential brain drain of the highly talented to other cities. And if a biotech, medical or semiconductor company is looking for a new manufacturing hub, it's likely to pick a city with a large population of highly skilled workers. That puts a place like Middletown, Ohio, at a competitive disadvantage, as only 12% of residents possess a bachelor's degree or better.

Though gloomy, this news is not necessarily a nail in these places' coffins. That's because turnarounds are possible, though without new industry it's difficult to know how long many of these spots can stay on life support.

"Until or unless other industries see this as a low-cost viable place to do business, turning into a Gary or Youngstown would be the worst-case scenario." says Cornell. "Pittsburgh is a good case in the sense that medical and biotech firms took the place of steel mills. That didn't help the steel workers, who don't have the necessary skills, but it helped their kids."